Bitcoin Price Rally Nearing Exhaustion as Tensions Rise

Bitcoin's recent price rally may be nearing its end, warns analyst Midas. In a post on Monday, he highlighted a bearish divergence between Bitcoin's price and its Relative Strength Index (RSI). The RSI has climbed above 80, indicating an overbought condition, while the price remains strong.

The current setup resembles the one in May, when Bitcoin showed a similar divergence near its highs before falling roughly 40%. Midas notes that this time around, the RSI is even higher, making the situation 'mega overheated'. He believes that unless Bitcoin can convincingly break and hold above $83,000, the larger bearish trend remains intact.

Another potential risk factor for Bitcoin is the ongoing US-Iran tensions. The recent escalation has sent Brent crude prices soaring above $90 a barrel, which could lead to higher inflation rates in the US. This would make it harder for the Federal Reserve to ease monetary policy, keeping interest rates elevated and tightening financial conditions.

The combination of these factors adds to the downside risk for Bitcoin. The cryptocurrency is currently consolidating within a symmetrical triangle on its four-hour chart, with potential targets near $74,800 if the triangle breaks down.